Facebook Stock Price

Thanks to crashing tech stocks, Americans have lost hundreds of billions of dollars in paper wealth over the past three trading days. As you will see below, we have just witnessed “the biggest market cap loss in history”, and many analysts believe that this is only just the beginning. At this point, even the mainstream media is fearing the worst. CNN is boldly proclaiming that “the tech bloodbath is here”, and there is a flood of mainstream articles giving advice to investors about how to ride out this crisis. But the amount of money that has already been lost is absolutely huge, and it isn’t going to take much to turn this panic into a full-blown stampede. In a lot of ways, what we are watching is very reminiscent of 2001. When the original tech bubble burst, the crash was so rapid and so dramatic that many ordinary investors were not able to react in time. As I have explained so many times before, markets tend to go down a whole lot faster than they go up, and the events of the last three trading days have been completely breathtaking.

A lot of people are responding as if this tech stock crash is a complete surprise, but the truth is that it shouldn’t be a surprise at all.

The only surprise is that the bubble lasted for as long as it did.

Even after the declines of the past three days, some of these tech companies still have some of the most absurd valuations that we have ever seen. There has been warning after warning that something like this could happen, but the optimists on Wall Street wanted to believe that the party would never come to an end.

Well, now the party is ending, and people are starting to understand the gravity of what we are facing. The following are 10 facts about this “tech bloodbath” that are almost too crazy to believe…

#1 The 10 leading U.S. tech companies lost an astounding 82.7 billion dollars in stock value on Monday.

#2 Overall, FANG stocks have lost 220 billion dollars in stock value over the last 3 trading days. According to Zero Hedge, that represents “the biggest market cap loss in history”.

The gargantuan one-day loss in the social media company’s market value eclipses the total value of warehouse club Costco, drug maker Bristol-Myers Squibb, investment powerhouse Goldman Sachs, defense contractor Lockheed Martin and credit-card company American Express, according to Bloomberg data.

The wealth destroyed also is more than the total value of farm equipment maker Caterpillar, home-improvement retailer Lowe’s, coffee seller Starbucks and drugstore chain CVS.

#5 One prominent ETF manager is saying that he doesn’t “see us being heavily invested in Facebook ever again”.

Ahead of Apple earnings scheduled for Tuesday evening, Larry McDonald, editor of the Bear Traps Report, warns to stay away from what has been one of the hottest areas of the market this year.

“These are stocks you want to run away from,” McDonald told CNBC’s “Trading Nation” on Friday. “I see potentially 30 percent to 40 percent downside on the FAANGs.”

Tech stocks led the way up during the first Internet bubble, and they also led the way down.

Will the same thing happen again this time around?

If some people think that the broader market will be immune as tech stocks continue to crash, they are just deceiving themselves. To a very large extent, it has been the tech industry that has been responsible for holding the market up in these troubled times. Right now the housing industry is slowing down substantially, we are in the midst of the worst “retail apocalypse” in American history, and big agriculture is being absolutely devastated by foreign tariffs.

There aren’t too many other bright spots for the U.S. economy at the moment, and so if the tech sector implodes we are going to see a lot of others go down with it.

Look, there is a reason why Mark Zuckerberg and other Facebook insiders dumped billions of dollars worth of Facebook stock in the months leading up to this crash. They all knew that trouble was brewing, and they wanted to get out while the getting out was good.

As I have told my readers so many times before, you only make money in the stock market if you get out at the right time, and those Facebook insiders picked the right time.

Hopefully the market will settle down tomorrow, and without a doubt we will see a bounce at some point. But it is certainly starting to feel like 2001 and 2008 all over again, but this time the bubble is far bigger than ever before.

Is this the beginning of the fall of Facebook? After announcing disappointing numbers for the second quarter on Wednesday, Facebook’s stock price plunged more than 20 percent in after-hours trading. If that decline holds on Thursday, it will be the biggest stock price drop in Facebook’s entire history. But the truth is that we will probably see the stock price bounce back a bit, because Wednesday’s crash was almost certainly an overreaction. Unlike many other tech companies, Facebook is still making lots of money, and the number of users globally is still growing. However, there are definitely some huge red flags. In the U.S. and Canada the number of users is stagnant, and in Europe the number of users is actually declining. Facebook’s user base is aging as many young people abandon the platform for trendier alternatives, and there is a growing backlash among conservatives against the tremendous censorship that we have seen in recent months. People are hungry for an alternative, and if something more appealing comes along Facebook could ultimately suffer the same fate as MySpace very rapidly.

Stock prices tend to fall a lot faster than they go up, but what happened to Facebook on Wednesday was truly breathtaking…

Facebook lost about $130 billion in market value in just two hours, its steepest stock decline ever, after warning of slowing sales growth.

The stock, which plunged as much as 24% in after-hours trading Wednesday, had a cascading effect on competitors Snap and Twitter, which dropped, too. Traders are bracing for a decline in tech stocks when the markets open Thursday.

130 billion dollars in just two hours?

In 2018, Facebook CEO Mark Zuckerberg has been selling Facebook stock like crazy, and that is probably a good thing because his remaining holdings declined by 16.8 billion dollars during the crash. If the stock price does not bounce back, Zuckerberg will slip all the way from third place to sixth place on the Bloomberg Billionaires Index.

He won’t exactly be hurting, but this shows us how fast things can start to move once investors begin to panic.

So exactly why did Facebook’s stock crash on Wednesday? Well, it turns out that revenue growth and user growth were lower than expected…

The problem: weaker-than-expected revenue growth, Facebook’s first such miss since 2015. It recorded sales of $13.23 billion for the three months ended in June, short of the $13.3 billion Wall Street anticipated.

Also alarming to investors: Facebook’s growth is slowing with users in some of its most lucrative markets. Facebook reported its slowest growth rate ever, with 2.23 billion people logging in at least once a month in June, below the 2.25 billion analysts expected.

In addition to the factors that I mentioned above, Europe’s new privacy law and the Cambridge Analytica scandal are really taking a toll…

The second-quarter results were the first sign that a new European privacy law and a succession of privacy scandals involving Cambridge Analytica and other app developers have bit into Facebook’s business. The company further warned that the toll would not be offset by revenue growth from emerging markets and Facebook’s Instagram app, which has been more immune from privacy concerns.

Ultimately, the adjustment to Europe’s new privacy law and the fallout from the Cambridge Analytica scandal are just temporary.

Facebook should be much more concerned about the fact that conservatives are getting completely fed up with the rampant censorship on the platform. During a media event on Wednesday, Facebook executives openly admitted that they are limiting distribution of certain viewpoints…

The kerfuffle started when Fidji Simo, Facebook’s vice president of video, was asked about Infowars stories on their platform while touting new Facebook Watch entertainment shows.

“To be totally transparent, I find Infowars to be absolutely atrocious,” Simo replied. “That being said, we have the hard job of balancing freedom of expression and safety. So the way we navigate that is we think there’s a pretty big difference between what is allowed on Facebook and what gets distribution. So what we’re trying to do is make it so that if you are saying something that’s untrue on Facebook — you’re allowed to say it as long as you’re an authentic person and you adhere to our community standards — but we’re trying to make it so it doesn’t get that much distribution .… We don’t always get it right, as you can imagine, it’s very complicated, but that’s sort of our principle for dealing with information.”

Just 51% of US individuals aged 13 to 17 say they use Facebook – a dramatic plunge from the 71% who said they used the social network in Pew’s previous study in 2015, when it was the dominant online platform.

We may very well look back someday and identify 2018 as the turning point for Facebook.

For now it is considered to be worth more than 600 billion dollars, but that market price won’t last forever.

One of these days a new and better competitor will arise, and Facebook will be consigned to the trash heap of history.